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Envisaging a paradigm shift in strategic marketing of pharmaceutical in India

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PricewaterhouseCoopers (PwC) recommended, about three years ago, in mid-2007 that for sustainable business performance the research-based global pharmaceutical companies should move a part of their significant expenditure from marketing to research. They also recommended that the drug prices should be related to incremental efficacy that the products would provide.

The report titled ‘Pharma 2020: The Vision’ commented that the business model of the global pharmaceutical companies is “economically unsustainable and operationally incapable of acting quickly enough to produce the types of innovative treatments demanded by global markets.”

Undergoing a paradigm shift:

As we witness, the global pharmaceutical industry is undergoing a paradigm shift. More drugs are going off patent than what the innovator companies can replace with the new products. The research is undoubtedly failing to deliver.

At the same time, the business growth in the developed markets of the world has been declining over a period of time. The growth in the top two pharmaceutical markets of the world viz, USA and Japan had gone negative. IMS predicted in their recent ‘CEO Conclave’ in Mumbai that low growth trends in these markets will continue even beyond 2013.

In the same conclave IMS predicted that within ‘Pharmerging’ markets, China is expected to record highest CAGR growth of over 25%, followed by India and Turkey around 12-14% each. With such a scorching pace of growth China is expected to become third largest pharmaceutical market in the world in 2013 with India holding its 2008 ranking of no. 13.

Global pharmaceutical ‘Marketing Expenditure’ is increasing:

The publication titled “The Cost of Pushing Pills: A New Estimate of Pharmaceutical Promotion Expenditures in the United States” co-authored by Marc-André Gagnon and Joel Lexchin estimated from the data collected from the industry and doctors during 2004 that the U.S. pharmaceutical industry spent 24.4% of the sales turnover on promotion, versus 13.4% for research and development. This was as a percentage of US domestic sales of US$ 235.4 billion in that year.

The researchers used 2004 as the comparison year, as this appears to be the latest year in which information was available from both IMS Health and CAM Group, the two international market research companies that provide the marketing and sales data together with those of consulting services. IMS obtains its data from pharmaceutical companies, while CAM obtains its data from the doctors. This study appeared in the January 3, 2008 issue of PLoS Medicine, an online journal published by the Public Library of Science.

The above findings though highlight that the US pharmaceutical industry is overall marketing-driven, also argues strongly in favor of a shift away from this direction.

Another publication named, the ‘Triangle Business Journal’ reported the findings from another study of ‘Cutting Edge Information’, a pharmaceutical research company based in Durham, North Carolina, USA. This survey reported, “the companies marketing the six blockbuster (turnover US $ 1 billion in the first year) drugs it studied spent an average of $238.5 million to market each product.”

The “Pharmabiz” of April 2, 2007 also reported, “The study of top 15 global pharma giants revealed that the marketing expenditure as percentage of total sales of these companies worked out to 30.5 as against the R&D expenses as a percentage of total sales of 15.1.”

Such high marketing expenditure is not sustainable in the long run – alternatives being explored:

As reported by IMS Health, in 2009 though the global pharmaceutical market recorded a turnover of US $ 837 billion with a growth rate of around 6.4% compared to 11.8% in 2001, the moot question remains, whether such type of marketing expenditure is sustainable during the era when the “patent cliff’ is pushing the global pharmaceutical industry to the brink.

This situation gets further aggravated when IMS Health reports, as the world’s 10 top selling prescription drugs go off patent, it will be difficult to replace them in terms of single-product value turnover. These brands are as follows:

- Lipitor, US$13.5 billion (Pfizer)

- Plavix, US$7.3 billion (sanofi-aventis)

- Nexium, US$7.2 billion (AstraZeneca)

- Seretide/Advair, US$7.1 billion (GlaxoSmithKline)

- Enbrel, US$5.3 billion (Amgen and Pfizer)

- Zyprexa, US$5 billion (Eli Lilly)

- Risperdal, US$4.9 billion (Johnson & Johnson)

- Seroquel, US$4.6 billion (AstraZeneca)

- Singulair, US$4.5 billion (Merck)

- Aranesp, US$4.4 billion (Amgen)

The business focus is now on the emerging markets like, India:

Thus the business focus of the global pharmaceutical majors are now on the key emerging markets, like India not only with their patented products, but more importantly by having a robust fast growing branded generic portfolio to more than offset the loss of revenue and profit from the blockbusters, as they go off patent.

Publicly expressed expectations of some Governments of the emerging markets:

Governments of some of these emerging markets expect local benefits out of the evolving growth opportunities of the global pharmaceutical companies from their respective countries. Various reports indicate that there could be following two key issues in these markets:

• Local manufacturing of products
• Pricing

Local manufacturing:

Out of these emerging markets, Indonesia has clearly spelt out its intention by specifying that the pharmaceutical companies marketing their products in Indonesia will need to establish local manufacturing facilities. The new rule is directed towards local job creation.

The Health Minister of Indonesia had commented, “If they want to get licenses (to sell their products) they have to invest here also, not just take advantage of the Indonesian market.” The Minister further added, “They can’t just operate like a retailer here, with an office that’s three meters by three, and make billions of rupiah. That’s not fair.” It has been reported that India and China may ultimately come out with similar requirements for their respective countries.

U.S. Chamber of Commerce has registered a strong protest in this matter with the President of Indonesia and has urged a reversal of this decision. However, the country appears to have taken a firm stand in this matter. This is evident when in response to the report that some global pharmaceutical companies have threatened withdrawal of their business from Indonesia because of this reason, the Health Minister retorted, “If they want to go away, go ahead.”

Pricing:

Anticipating such moves in the emerging markets, some global companies like, GlaxoSmithKline (GSK) and MSD have already started implemeting differential pricing strategies for their patented products in the emerging markets like India.

Some visionary global CEOs like, Andrew witty of GSK strongly believes that such differential pricing will enable more patients in the emerging markets to afford his company’s products. Consequently the increased sales volume will not only offset the sales value loss but will also create a substantial goodwill for the company in these markets, over a period of time.

Quoting Andrew Witty the ‘Wall Street Journal’ (WSJ) reported that in Philippines, GSK had reduced the price of 28 products by 30% to 50%. In other emerging markets of Asia including India, Malaysia and Thailand the company has reduced the prices of Cervarix, its cervical cancer vaccine, substantially.

India has also witnessed such differential pricing strategy by other innovator companies for their patented products in the country.

Prescribing four new key strategic changes in the new paradigm:

In the new paradigm, almost in tandem, four new key strategic changes, in my view, will gradually unfold in the Indian pharmaceutical market. These are as follows:

1. An integrated approach towards disease prevention will emerge as equally important as treating the diseases.

2. A shift from just product marketing to marketing of a bundle of value added comprehensive disease management processes along with the product will be the order of the day.

3. Over the counter (OTC) medicines, especially those originated from natural products to treat common and less serious illness, will curve out a sizable share of the market, as appropriate regulations are expected to be put in place adequately supported by AYUSH.

4. Most importantly, the country will move towards an integrated and robust healthcare financing system, as already articulated just in the last month by Mr. Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission of India, which will usher in the following changes:

- Doctors will no longer be the sole decision makers for prescribing drugs to the patients and the way they will treat the common diseases. Ministry of Health/ Healthcare providers/ Medical insurance companies will start playing a key role in these areas by providing to the doctors well thought out treatment guidelines.

- For a significant proportion of the products that the pharmaceutical companies will sell, tough price negotiation with the healthcare providers/ medical insurance companies will be inevitable.

- Health Technology Assessment (HTA) or outcome based pricing will gradually play an important role in pricing a healthcare product.

- This could well mean lesser role of the Medical Representatives in the demand generation process for the pharmaceutical products, which could possibly have a positive impact on the cost of marketing and sales promotion, incurred by the respective pharmaceutical companies.

Conclusion:

With all these changes within the Indian pharmaceutical industry, it may not be easy for the local players to adapt to the new paradigm sooner and compete with the global players on equal footing, even in the branded generic space. In my view, those Indian Pharmaceutical companies, who are already global players in their own right and relatively well versed with the nuances of this new ball game, will have a significant competitive edge over other domestic players. The global-local companies, in my view, will offer a tough competition to the local-global players, especially, in the branded generic space and at the same time will be able to bring down their marketing expenses significantly.

So far as other domestic players are concerned, the fast changing environment could throw a new challenge to many of them, accelerating the consolidation process within the Indian pharmaceutical industry.

We all should be well aware, just as today’s pharmaceutical business dynamics in India are not replica of what these were in the yesteryears, tomorrow’s pharmaceutical business dynamics of the country will not be a replica of what these are today.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Why does the Government divert focus on to fringe issues to address critical healthcare concerns of the nation?

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The Department of Industrial Policy and Promotion (DIPP) of the Ministry of Commerce and Industry of the Government of India has recently initiated a public debate through a ‘Discussion Paper on Compulsory Licensing (CL) of Patented Pharmaceutical Products’.

The key intent of the discussion is presumably to improve access to quality medicines at an affordable price to the people of the country.

Could such debate serve any meaningful purpose?

Since the issue of CL involves only patented products, I wonder, whether this debate would in any way help sorting out the issue of poor access to modern medicines in our country or this is just another ‘hog wash’ or ‘diversion ploy’ of the decision makers to divert the attention of the stakeholders from the core issues of poor access to healthcare for the common man of India.

Will CL be able to address abysmally poor access to medicines issues in India?

A quick analysis of the prevailing situation related to access to modern medicines in India suggests that the usage of patented pharmaceutical products account for much less than 1% of the sum total of all medicines consumed in India in value terms. In volume terms it will be even more miniscule in terms of percentage.

As per IMS (MAT July, 2010) Indian Pharmaceutical Market size is Rs. 44,476 Crore, even 1% market share of the patented pharmaceutical products will mean Rs. 445 Crore, which is quite far from reality.

Thus, CL of patented medicines would have no sustainable and meaningful impact on improving access to modern medicines for the common man of the country. Moreover, around 40% of the population of India live below the poverty line (BPL). These ‘Children of a lesser God‘ very unfortunately, will not be able to afford any price of medicine, however cheap these could be. Vast majority of the such population who lack the financial capability to pay for even the cheapest off-patent generic medicines, which comprise more than 99% of the total medicines consumed within the country, will continue to be left in the lurch.

65% of Indians do not have access to WHO list of essential medicines, which surpasses even the African countries:

Our government also admits that 65% of Indians do not have access to even WHO list of essential medicines, none of which holds a valid patent in the country. This should be the key concern in the country. Moreover, the World Health Organization (WHO) reported that during 2000-2007, India had poorer access to essential medicines than even many African countries. It is worth noting that many of these African countries has a patent life for pharmaceuticals for around 30 years, against of 20 years in India. What are we then talking about?

Provisions of CL in the Indian Patents Acts are robust enough:

In any case, the provisions of CL in the Indian Patents Acts are not only quite clear and well articulated, but also at the same time offer flexibility in the decision making process to the Indian Patent Offices (IPOs) to invoke CL in a justifiable situation. Thus proposed guidelines related to CL would possibly invite more questions than answers. Consequently, it will be an extremely complicated process for the IPOs to categorize all the situations related to CL. Therefore, in my view, such initiatives, as initiated by the DIPP to frame guidelines for CL could prove to be totally counterproductive, as such guidelines, as stated above, would seriously limit the flexibility of the IPOs to take appropriate action, even when it would require to do so.

Moreover, it is absolutely imperative for the Government to ensure that the primacy of the patent statutes is not disturbed in any way, as such guidelines related to CL would only be consistent with the appropriate provisions within the statute and cannot be used beyond the Patent Law of the land. It goes without saying that any dispute between the parties related to the interpretation of the provisions within the statute related to CL, should only be resolved by the judiciary.

Conclusion:

How could then CL possibly offer answers to the vexing healthcare access issues of the nation? Is the Government not wasting its precious little time, instead of trying to ‘take the bull by the horns’ and resolve the critical ‘access to affordable quality medicines’ issue of India through Public Private Partnership (PPP) initiatives?

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Progress of the ‘Millennium Development Goals (MDGs)’ in India: a little to cheer, more to ponder

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The world has just five more years to achieve the ‘Millennium Development Goals (MDGs)’. To accelerate progress of this unique United Nation’s initiative the UN Secretary-General Ban Ki-moon has called on world leaders to attend a summit in New York on 20-22 September 2010. Under this back-drop let us deliberate on the progress made by India on this global project.

The ‘Millennium Development Goals (MDGs)’:

These are eight time-bound comprehensive developmental goals, both global and country-specific, adopted by the world leaders in the year 2000, with clearly defined benchmarks and targets to achieve by the year 2015, encompassing even the healthcare space. The key purpose of the MDGs is to address multi-dimensional issues and manifestations of extreme poverty prevailing in the world. The eight MDGs, which have been clearly divided into 18 quantifiable targets and evaluated by 48 indicators, are as follows.

1: Eradicate extreme poverty and hunger
2: Achieve universal primary education
3: Promote gender equality and empower women
4: Reduce child mortality
5: Improve maternal health
6: Combat HIV/AIDS, malaria and other diseases
7: Ensure environmental sustainability
8: Develop a Global Partnership for Development

What happens, if these goals are achieved?

MDGs provide a unique platform to the civil society across the nations to work in unison with common objectives to ensure equitable distribution of the outcome of human development in all countries of the world. If the MDGs are achieved by all the nations, it is believed, ‘world poverty will be cut by half, tens of millions of lives will be saved, and billions more people will have the opportunity to benefit from the global economy’.

UNDP score card and forecast:

The first India country-report on the MDGs for the year 2005 was released by the Government of India on February 13, 2006 in Delhi. Now with just five more years to go, let me take you through the following broad and major findings from an assessment report prepared by the United Nations Development Program (UNDP) in 2009 on the same:

1: Eradicate extreme poverty and hunger:

Set objective: India must reduce the number of people below the poverty line from around 37,5% in 1990 to around 18.75% in 2015.

Progress:

• Absolute number of poor has declined from 320 million (36% of population) in 1993-94 to 301 million (27.6% of total population) in 2004-05. At this rate, the country will still have 279 million people (22.1%) living below the poverty line in 2015.

• India is slow in eliminating the effects of malnutrition, going by the proportion of underweight children below three years of age. This proportion has declined only marginally from about 47 in 1998-99 to about 46 percent in 2005-06. At this rate, 40% of children will still remain underweight by 2015.

2: Achieve universal primary education:

Set objective: India should increase the primary school enrolment rate to 100% and wipe out the drop-outs by 2015 against 41.96% in 1991-92.

Progress: Going at the rate by which youth literacy increased between 1991 and 2001, from 61.9% to 76.4%, India is expected to have 100 percent youth literacy by the end of 2012.

3: Promote gender equality and empower women:

Set objective: India will promote female participation at all levels to reach a female: male proportion of equal levels by 2015.

Progress: Gender parity in primary and secondary education is likely to be achieved, though not in tertiary education. But the share of women in wage employment in the non-farm sector can at best be expected to reach a level of about 24% by 2015, far short of parity.

4: Reduce child mortality:

Set objective: India will reduce under- five mortality rate (U5MR) from 125 deaths per thousand live births in 1988-92 to 42 in 2015.

Progress: Prevalence of child mortality is down from 125 per thousand live births in 1990 to 74.6 per thousand live births in 2005-06. At this rate, the level is expected to reach 70 per thousand by 2015, short of the target of 42 per thousand live births by 2015.

5: Improve maternal health:

Set objective: India should reduce maternal mortality rate (MMR) from 437 deaths per 100,000 live births in 1991 to 109 by 2015.

Progress: The national MMR level has come down from 398 per 100,000 live births in 1997‐98 to 254 per 100,000 live births in 2004‐06, a 36% decline over a span of seven years as compared to a 25% decline in the preceding eight years from 1990‐1997. Given to achieve an MMR of 109 per 100,000 live births by 2015, India tends to fall short by about 26 points as it tends to reach MMR of about 135 per 100,000 live births in 2015.

6: Combat HIV/AIDS, malaria and other diseases:

Set objective: India has a low prevalence of HIV among pregnant women as compared to other developing countries, yet the prevalence rate has increased from 0.74 per thousand pregnant women in 2002 to 0.86 in 2003. The increasing trend needs to be reversed by 2015.

Progress:

• Spread of HIV/AIDS in the country shows a downward trend: from 2.73 million (0.45%) people living with HIV/AIDS in 2002, the number has declined to 2.31 million (0.34%) by 2007.

• With 1.9 million tuberculosis cases estimated in 2008, India has a fifth of the world’s total. But India made the most notable progress in providing treatment across the country. In 2008, over 1.5 million patients were enrolled for treatment.

7: Ensure environmental sustainability:

Set objectives:

• Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources.

• Halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation

Progress:

• During the past decade, India’s forest cover has increased by 728 sq. km, access to water is up from 68.2% in 1992-93 to 84.4% in 2007-08 and in urban areas it is 95%.

• 2015 Target (83%) for proportion of households without access to safe drinking water sources has already been attained by 2007‐08 (84%).

• At the current rate of decline, India is likely to have the proportion of households without any sanitation reduced to about 46% by 2015 against the target of 38%.

8: Develop a Global Partnership for Development:

Set objective: Co-operation with the private sector and making available the benefits of new technologies.

Progress: Overall tele-density has remarkably increased from 0.67 per 100 population in 1991 to 36.98 per 100 population in March 2009.

Conclusion:

Though in some areas of MDGs like, achieving universal primary education, combating HIV, malaria and tuberculosis, ensuring environmental sustainability and developing a global partnership for development, India has something to cheer about. However, in other areas the progress made by the country, as on date, is far from satisfactory, as there are more key issues to ponder. The main reasons of inadequacy in these areas being low public spend of around 1.1% of GDP on health and 4.1% on education.

Moreover, the awareness, contribution and involvement of other stakeholders like Corporates, NGOs and the Civil Society at large in most of the states of India, if not all, in this commendable global initiative is dismal, to say the least.

If India wants to come out with flying colors by end 2015 in its efforts to effectively address multi-dimensional issues and manifestations of extreme poverty and hunger prevailing in the country, the Country assessment report prepared by the UNDP in 2009 on MDGs, should be taken as the ‘wake-up’ call to make good the lost time– as the saying goes ‘better late than never’.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Patients’ Safety, regulatory approval of Biosimilar Drugs in India and WHO Biosimilar guidelines

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Biopharmaceutical drugs are broadly defined as:

”Those medicines produced using a living system or genetically modified organism. These drugs are different from traditional chemical medicines in many ways. Size of the molecule is one of the most obvious distinctions: the molecules of a biopharmaceutical medicine are much larger, have far more complex spatial structures and are much more diverse (“heterogeneous”) than the chemical molecules which make up classical drugs.”

The Biosimilar drugs:

Biosimilar drugs are follow-on versions of original biopharmaceutical medicines. Biosimilar medicines are intended to have the same mechanism of action for the same diseases as the original biopharmaceutical drugs.

The term “bio generic” will be misleading for off patent biopharmaceutical products, as no two biopharmaceutical products could possibly be exactly identical. This is mainly because of the following reason:

“Whereas generics of chemistry based medicines are identical in the molecular structure and therefore copies of the original product, based on a strict definition of “sameness”, a corresponding definition cannot be established for biosimilar medicines because of their nature and the complexity of their manufacturing process. Here post-translational modifications are dependent of the host cell and the process.”

Thus the common terminologies used to describe such products when the original products go off-patent are follow-on biologics and biosimilars.

Manufacturing Conditions of biosimilars ultimately define the final product:

Unlike chemical drugs, the manufacturing conditions and the process followed to produce biopharmaceutical drugs largely define the final product and its quality. Any alteration to the manufacturing process may result in a completely different product. Additionally proteins are relatively unstable. Thus additional measures in their storage, formulation and delivery are very critical.

Key concerns with the existing regulatory approval process for Biosimilar drugs:

• Small changes in the manufacturing process of biosimilar drugs could significantly affect the safety and efficacy of the molecule.

• Due to the very nature of a biologic it is virtually impossible for two different manufacturers to manufacture two identical biopharmaceutical drugs. Identical host expression systems, processes and equivalent technologies need to be demonstrated in extensive comparability trials. Thus, as stated above, a ‘bio generic’ cannot exist.

• As against the situation applicable for generics of chemical molecules which can be replicated, biosimilar drugs cannot be replicated. At the most such biopharmaceuticals can be at the most “similar” but not “identical” to the original reference products. To ensure desired efficacy and safety of biosimilar products, these products should only be approved after charting out a formal and well validated regulatory pathway for the biosimilar drugs in India.

• Currently biosimilar drugs are given marketing approval by the regulator without such guidelines for large molecule biological and following just the bioequivalence model as specified in the Schedule Y of the Drugs and Cosmetics Act (D&CA) of India for small molecule chemical entities only, as the current Drugs and cosmetics Acts of India, very unfortunately, do not differentiate between large and small molecular drugs. This could, in turn, endanger patients’ safety with serious medical consequences.

Although, Central Drugs Standard Control Organization (CDSCO) and the Drugs Controller General of India (DCGI) are responsible for approvals of the new drug applications, health being a state subject, respective state regulatory authorities are responsible for granting manufacturing license to the pharmaceutical manufacturers.

Pharmaceutical manufacturers setting up facilities in the states, where regulatory oversight and incidences of weaker enforcement are common, will be able to market their products, including biosimilars, across the country. It is alleged that there are hardly any regulatory control over the mistakes or offences committed by the State Drug authorities who permit manufacture of drugs even unapproved by the DCGI. The existing issue of mushrooming of various irrational Fixed Dose Combinations (FDC) products in India will vindicate this point.

The Government’s response to this public health concern:

Express Pharma in its June 30, 2009 edition reported Dr M K Bhan, Secretary, Government of India, DBT, saying, “The first question is do we have written guidelines available to people? Currently, we have a large committee of about 30 people in the Review Committee on Genetic Manipulation (RCGM) which frequently discusses the current FDA and EMEA guidelines and makes sure that it is updated as per the guidelines in case by case approvals.”

He acknowledged, to make sure that the product is identical or original is harder for biological than for chemical entities and said, “So the next question is, what is the degree of difficulty you create to be sure that some of the products in the in vitro laboratories and the strength of the biomolecule, are to be characterized in details, and the other side is how expensive should the chemical evaluation be? At this moment, RCGM is seeing the issues and is in touch with both the FDA and the EMEA, and they are taking case by case decisions while trying to standardize the minimum information that is required to show how companies have characterized their products.”

“If we ask a big established company on this issue they will tell us to be strict, whereas a smaller company will suggest otherwise. What we are trying to do is being very scientific and come to a conclusion,” reported Express Pharma quoting Dr. Bhan.

The current practice:

Much water has flown down the bridge since the above interview was published. Nothing much has changed on ground regarding this critical issue, thus far. The industry sources allege that even today regulatory approval of biosimilar drugs (large molecules) are granted based on Phase III clinical trials, as specified in the schedule Y of the Drugs and Cosmetics Acts for the small molecules (chemicals) and that too conducted mostly on just 40 to 45 patients. At times the number of patients studied is even lesser. Immunogenicity study, which is so important for biosimilar drugs is, more often than not, overlooked. This could seriously compromise patients’ safety with such category of drugs.

Conclusion:

It is, indeed, quite surprising that in our country there is still no separate transparent and published guidelines for regulatory approval of Biosimilar drugs even when the World Health Organization (WHO) has come out with the same and India had actively participated in that exercise.
The question, therefore, comes to my mind whether the Biosimilar drugs manufactured in India would conform to international quality and safety standards, like in the U.K or what has been recently announced in the USA? If not, who will address the safety concerns of the patients administering these life saving medicines?

Such a concern gets vindicated by widely reported serious quality problems, detected by the drugs regulatory authorities, at some large and well known Biosimilar drug’s manufacturing units in India, in not too distant past and also from the condition of some vaccine manufacturing units in our country. The recent example of WHO cancelling the pre-qualification of ‘Shan 5’ (Shanta Biotech) vaccines for quality related problems, perhaps may help opening the eyes of our regulators, on the related patients’ safety issues arising out of regulatory laxity.

This issue assumes even greater importance considering the very recent development of the Department of Biotechnology (DBT) unfolding an interesting scheme to encourage development of biosimialr dugs in India by offering financial support to the domestic pharmaceutical and biopharmaceutical industry.

The proposed new regulatory pathway for the marketing approval of Biosimilar drugs in India will immensely help paving the way for the Biopharmaceuticals drugs manufacturers in India to adequately prepare themselves to grab a significant share of the fast emerging Biosimilar drugs markets, particularly, in Europe and the USA, in the years to come.

The Ministry of Health and the Department of Biotechnology of the Government of India should, therefore, urgently and jointly consider amending the Drugs & Cosmetics Acts of India accordingly and establish robust regulatory guidelines for marketing approval of biosimilar drugs in the country, acknowledging the widespread concern for patients’ safety.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

Leverage the potential of ‘Telemedicine’ to effectively address the healthcare needs of India

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The World Health Organization (WHO) has defined telemedicine as follows:

“The delivery of healthcare services, where distance is a critical factor, by all healthcare professionals using information and communication technologies for the exchange of valid information for diagnosis, treatment and prevention of disease and injuries, research and evaluation, and for continuing education of healthcare providers, all in the interests of advancing the health of individuals and their communities”

Telemedicine is gradually becoming popular in India, like in many other countries of the world. This emerging technology based healthcare service, will surely meet the unmet needs of the patients located in the far flung areas, by providing them access to medical specialists for treatment of even tertiary level of their ailments, without requiring to travel outside their villages or small towns where they reside. Telemedicine is, therefore, slowly but gradually emerging as a convenient and cost-effective way of treating even complicated diseases of the rural population.

The applications of Telemedicine:

1. To extend affordable quality healthcare services to those places where these are not available due to basic healthcare infrastructure and delivery issues.

2. Electronic transmission of clinical information of both synchronous and asynchronous types, involving voice and data transfer of patients to distantly located experts and get their treatment advice, online.

3. To effectively train the medics and the paramedics located in distant places and proper management of healthcare delivery/service systems.

4. Disaster management.

The Process:

The process can be:

- ‘Real time’ or synchronous when through a telecommunication link real time interaction between the patients and doctors/experts can take place. This technology can be used even for tele-robotic surgery.

- ‘Non-real time’ or asynchronous type when through a telecommunication link, stored diagnostics/medical data and other details of the patients are transmitted to the specialists for off-line assessment and advice at a time of convenience of the specialists.

These processes facilitate access to specialists’ healthcare services by the rural patients and the rural medical practitioners reducing avoidable travel time and related expenses. At the same time such interaction helps upgrading the knowledge of the rural medical practitioners and paramedics.

The Promise:

‘Telemedicine’ is capable of taking modern healthcare to remote rural areas using Information Technology (IT), as specialists are mostly based in the cities. As majority of the diseases do not require surgery, ‘telemedicine’ will prove to be very conducive to such patients and economical too.
Relevance of Telemedicine in India:

With its over 1.12 billion population and equally huge and not so well addressed disease burden, spreading across distant and remote semi-urban and rural areas where over 70 per cent of the population of the country lives, India by any standard is a country, which should focus on ‘Telemedicine’ to meet the unmet healthcare needs of the common man.

Telemedicine, therefore, is very relevant for the country, as it faces a scarcity of both hospitals and medical specialists. In India for every 10,000 of the population just 0.6 doctors is available. According to the Planning Commission, India is short of 600,000 doctors, 10 lakh nurses and 200,000 dental surgeons. Over 72 percent of Indians live in rural areas where facilities of healthcare are still grossly inadequate. Most of the specialists are reluctant to go to the rural areas. In addition, 80 percent of doctors, 75 percent of dispensaries and 60 percent of hospitals, are situated in urban India.

Telemedicine should be leveraged to bridge the gap of healthcare divide:

Equitable access to healthcare is the overriding goal of the National Health Policy 2002. Telemedicine has a great potential to ensure that the inequities in the access to healthcare services are adequately addressed by the country.

ISRO and the progress of Telemedicine in India:

The concept of ‘Telemedicine’ is relatively new in India and started drawing attention of the Government since 1999, when the Indian Space Research Organization (ISRO) deploying a SATCOM-based telemedicine network took its pioneering step towards this direction and is currently playing a key role in the evolution and development of ‘telemedicine’ in India. ISRO with its effective application of world class satellite communication technology with modern medical science and information technology has engaged itself very seriously to ensure availability of specialty healthcare services right at the doorsteps of a vast majority of deprived population living even in the distant and remote places of the rural India.

Government and private initiatives:

Since then the Ministry of Health and Family welfare with its initiative through information technology in some country level projects forming the National Telemedicine Taskforce, some private healthcare institutions like Apollo and various State Governments like, Tamil Nadu, Andhra Pradesh, Kerala and West Bengal also took admirable initiatives to translate the concept of ‘telemedicine’ into reality, especially for the rural India.

Subsequently, private telemedicine solution providers have now started coming-up, in a very sporadic manner though. Active participation of the civil society and meaningful Public private Partnership (PPP) projects are essential not only to get engaged in creating awareness for ‘telemedicine’ within India, but also to ensure that required blend of a high quality of technical and medical manpower that the country currently possesses are effectively utilized to establish India as a pioneering nation and a model to emulate in the field of telemedicine.

The market of Telemedicine in India:

Frost & Sullivan has estimated the telemedicine market of India at US$3.4 million, which is expected to record a CAGR of over 21 percent between 2007 and 2014.

Practices of Telemedicine in India:

Not only the central government of India, many state governments and private players are also entering into telemedicine in a big way with the Indian Space Research Organization (ISRO) playing a pivotal role, as indicated earlier. Some of the encouraging examples are as follows:

Telemedicine in Tamil Nadu:

Wi-Fi video conferencing network has now enabled ophthalmologists in the country to treat patients located in distant rural areas.

For example in an eye clinic in Andipatti village of Tamil Nadu state patients are connected through an inexpensive Wi-Fi video conferencing network with an ophthalmologist located about 15 kilometers away at the Aravind Eye Hospital in the city of Theni, for diagnosis and treatment of ophthalmological conditions. It has been reported that in the last six years eight such vision centers have been opened in the Theni district to provide eye treatment through ‘telemedicine’ to the affected population. These centers are managed by ophthalmic assistants trained to conduct a full eye examination, administer diagnostic tests, treat simple ailments and prescribe glasses. An ophthalmologist located as far away as 150 kilometers gives the final advice to the patients through videoconferencing and incurring a fraction of the expenses of what the patient would have otherwise incurred for getting treated at the district hospital of Theni.

World Health Organization (WHO) in its recent report has highlighted that about one third of the 45 million blind population of the world, live in India with majority of the causes being easily treatable cataracts and diabetes. It is worth mentioning that India has pledged to eliminate avoidable blindness in 10 years, under WHO 2020 initiative.

The Government of India is contemplating to create 20,000 more rural vision centers in the next few years.

Telemedicine in Kerala:

In Kerala selected referral Telemedicine Centers which are ‘Taluk Hospitals’ are connected to the Specialty hospitals through ISDN dial-up connection and the Telemedicine software MERCURY for creating and transferring the Electronic Medical Record (EMR) from sources like ECG, Microscope and Scanner.

A Telemedicine system for Cancer Patients called ‘CancerNet’ has also been created in the state for cancer detection, treatment, pain relief ,patient follow-up and continuity of care in peripheral hospitals (nodal centers) of Regional Cancer Centre (RCC). This facility connects RCC, Trivandrum and five nodal outreach centers. More than 3000 patients are treated or consulted in these nodal centers offering significant financial benefits to patients.

The specialty centers are located at:

• Medical College Hospital, Thiruvananthapuram
• Sree Chitra Thirunal Institute of Medical Science and Technology, Thiruvananthapuram
• Regional Cancer Center,Thiruvananthapuram
• Mental Health Centre, Thiruvananthapuram

The remote nodal centers are located at:

• Taluk Hospital, Neyyattinkara
• Taluk headquarters Hospital, Quilandy
• Taluk Hospital, Mavelikkara
• Taluk Hospital, Vythiri, Wayanad

Telemedicine in Andhra Pradesh:

Among the private initiatives the Apollo group of hospitals took a pioneering initiative in ‘telemedicine’ with a pilot project at a secondary level hospital in Aragonda village located about16 km away from the town Chittoor in Andhra Pradesh, covering a population of 5000.

Telemedicine in West Bengal:

Telemedicine for Tropical Diseases utilizing Technology developed by WEBEL & IIT Kharagpur has been developed by the state for diagnosis and monitoring of skin and blood related tropical diseases in West Bengal. The facility has been installed in School of Tropical Medicine, Kolkata and two District Hospitals. This is now being upgraded and extended to cover two referral hospitals and four District hospitals.

Telemedicine in North Eastern States:

A facility of Telemedicine Solution is being developed in Kohima Hospital of Nagaland under a Public Private Partnership (PPP) between the Government of Nagaland, Marubeni India Ltd, Apollo Hospitals and the Ministry of Communications and Information Technology. Two telemedicine centers are being set up connecting hospitals in the capitals of the North-eastern states, Sikkim and Tripura with super-specialty hospital under Community Information Centre scheme of DIT. North Eastern Council of India is planning to cover all 75 districts in seven states through Telemedicine.

Allocate more fund for Telemedicine:

Telemedicine now shows an immense potential, within the frugal healthcare infrastructure of India, to catapult rural healthcare services, especially secondary and tertiary, to a different level altogether. Current data indicate that over 278 hospitals in India have already been provided with telemedicine facilities. 235 small hospitals including those in rural areas are now connected to 43 specialty hospitals. ISRO provides the hospitals with telemedicine systems including software, hardware, communication equipment and even satellite bandwidth.

In 1999, India based one of the largest healthcare providers in Asia, The Apollo Hospitals Group also entered into telemedicine space. Today, the group has quite successfully established over 115 telemedicine locations in India, It has been reported that a ‘tele-consultation’ between the experts and the rural center ranges from 15 to 30 minutes in these facilities.

The state governments and private hospitals are now required to allocate adequate funds to further develop and improve penetration of Telemedicine facilities in India.

Issues with Telemedicine in India:

- Telemedicine is not free from various complicated legal, social, technical and consumer related issues, which need to be addressed urgently.

- Many a time, doctors feel that for Telemedicine they need to work extra hours without commensurate monetary compensation, as per their expectations.

- The myth created that setting up and running a Telemedicine facility is expensive needs to be broken, as all these costs can be easily recovered by any hospital through nominal charges to the patients.

- Inadequate and uninterrupted availability of power supply could limit proper functioning of a telemedicine center.

- High quality of Telemedicine related voice and data transfer is of utmost importance. Any compromise in this area may have significant impact on the treatment outcome of a patient.

- Lack of trained manpower for Telemedicine can be addressed by making it a part of regular medical college curriculum.

- Legal implications, if arise, out of any Telemedicine treatment need to be clearly articulated.

- A system needs to be worked out to prevent any possible misuse or abuse of the confidential Telemedicine treatment data of a patient.

- Reimbursement procedure of Telemedicine treatment costs by the medical insurance companies needs to be effectively addressed.

Conclusion:

Because of a very large population of India living in remote and distant rural areas, ‘telemedicine’ would play a very special and critical role in India to address the healthcare needs of the common man. With increasing coverage of telemedicine, it is imperative that required regulatory standards and guidelines for the same is put in place across the country.

Some significant and path breaking advances have indeed been made in the field of ‘telemedicine’ in India. It is though unfortunate that enough awareness for an optimal spread of this critical facility has been created, as yet to address the healthcare needs of a vast majority of the population in India, effectively. The pioneering role that ISRO has been playing in this field is also not known to many. All powerful ‘Fourth Estate’, I reckon, should now take more interest to initiate a healthy discussion and debate on this important healthcare solution, within the civil society.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

The First Pharmaceuticals Census of India – a commendable initiative by the National Pharmaceutical Pricing Authority (NPPA)

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Currently there is indeed a crying need for the pharmaceutical industry to generate a robust data base to formulate not only various healthcare related policies, but also to measure the level of their effective implementation. In the absence of such dependable and credible facts, most of the arguments, which take place between the government and other stakeholders, are mainly based on ‘your views’ versus ‘our views’.

An admirable initiative:

To address this critical need, more than a couple of years ago in February 2008, the National Pharmaceutical Pricing Authority (NPPA) announced their intent to initiate the first pharmaceuticals census of India (FPCI). The main purpose of this census is to create a structured, comprehensive and dependable pharmaceutical industry related database in the country to capture valuable information, which could be prudently used by the government towards effective planning, policy making and good governance. NPPA is also expected to publish this census data for all stakeholders and other ministries within the government for appropriate actions.

Create a ‘Common Thread’:

This ‘Pharmaceutical Map’, I guess, will be able to create a common thread for the Ministry of Health, Departments of Pharmaceuticals and Biotechnology, Ministry of Commerce & Industries and the Ministry of Finance based on which each of them will frame their respective healthcare related policies targeting the needs of a vast majority of the population of the country, for inclusive growth.

The ‘Methodology’ will be very important:

I understand that the FPCI is expected to cover over 10,000 manufacturing units in the country in a well-structured manner to produce an elaborate healthcare related credible data bank for India. The methodology that will be followed for this census will determine the credibility of the data thus generated.

My expectation from the FPCI is that, as announced, this will be able to provide credible details, among others, on the following ten key areas of the Pharmaceutical Manufacturing Units (PMUs) to enable the policy makers to frame policies based on the ground realities and at the same time measure the level of their effective implementations:

• Turnover by types and class (Micro, Small, Medium, and Large)
• Locations with separate details of Export Oriented Units (EOUs)
• Capacity installed, capacity utilized by major products
• Number of ‘own’ and ‘loan’ licenses units and by type of units, license issued by the respective state
drug controllers
• Types, class and pattern (plant & machinery, land & building) of investments
• Consumption of indigenous and imported inputs and utilities
• Adherence to GMP
• Product types and pricing
• Pattern of expenditure on R&D, clinical trials and quality control
• Employment generated in the country by the pharma sector

All these data will be available state-wise and district-wise by class and types of industry (API, formulations), among others.

It has been reported that NPPA has by now progressed quite a lot with the FPCI and the Final Report may be published soon.

Conclusion:

It would have been excellent, if FPCI would also have generated data on ‘Access to Modern Medicines’ in India.

Be that as it may, this is an admirable initiative by the NPPA. Data thus generated will be immensely useful to all stakeholders, if updated in every 3 to 5 years to maintain their relevance.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Will Global Pharma Majors be successful in their foray into highly competitive generics pharma business offering no (patent) protection of any kind?

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As reported by IMS Health, emerging markets will register a growth rate of 14% to 17% by 2014, when the developed markets will be growing by 3% to 6% during the same period. It is forecasted that the global pharmaceutical industry will record a turnover of US$1.1 trillion by this period.

Mega consolidation process in India begins in 2009:

Fuelled by the above trend, the year 2009 witnessed the second biggest merger, so far, in the branded generics market of India when the third largest drug maker of Japan, Daiichi Sankyo acquired 63.9 percent stake of Ranbaxy Laboratories of India for US $4.2 billion.

This was widely believed to be a win-win deal for both Ranbaxy and Daiichi Sankyo, when Daiichi Sankyo will leverage the cost arbitrage of Ranbaxy effectively while Ranbaxy will benefit from the innovative product range of Daiichi Sankyo. This deal also establishes Daiichi Sankyo as one of the leading pharmaceutical generic manufacturers of the world, making the merged company a force to reckon with, in the space of both innovative and generic pharmaceuticals business.

Another mega acquisition soon followed:

Daiichi Sankyo – Ranbaxy deal was followed in the very next year by Abbott’s acquisition of the branded generic business of Piramal Healthcare in India. This deal, once again, vindicated the attractiveness of the large domestic Indian Pharma players to the global pharma majors.

In May 2010, the Pharma major in the US Abbott catapulted itself to number one position in the Indian Pharmaceutical Market (IPM) by acquiring the branded generics business of Piramal Healthcare with whopping US$3.72 billion. Abbott acquired Piramal Healthcare at around 9 times of its sales multiple against around 4 times of the same paid by Daiichi Sankyo.

Was the valuation right for the acquired companies?

Abbott had valued Piramal’s formulations business at about eight times sales, which is almost twice that of what Japan’s Daiichi Sankyo paid for its US$4.6 billion purchase of a controlling stake in India’s Ranbaxy Laboratories in June 2008.

According to Michael Warmuth, senior vice-president, established products of Abbott, the acquired business will report to him and will be run as a standalone business unit after conclusion of the merger process. Warmuth expects that the sales turnover of Abbott in India, after this acquisition, will grow from its current around US$ 480 million to US$2.5 billion in the next decade.

On the valuation, Warmuth of Abbott has reportedly commented “If you want the best companies you will pay a premium; however, we feel it was the right price.” This is not surprising at all, as we all remember Daiichi Sankyo commented that the valuation was right even for Ranbaxy, even when they wrote off US$3.5 billion on its acquisition.

For Abbott, is it a step towards Global Generics Markets?

It is believed that the Piramal acquisition is intended towards achieving a quantum growth of Abbott’s business in the IPM. However, it is equally important to note the widely reported quite interesting statement of Michael Warmuth’s, when he said, “we have no plans immediately to export Piramal products [to third-country markets] but we will evaluate that. You won’t be at all surprised that if we evaluate that.”

The Key driver for acquisition of large Indian companies:

Such strategies highlight the intent of the global players to quickly grab sizeable share of the highly fragmented IPM – the second fastest growing and one of the most important emerging markets of the world.

If there is one most important key driver for such consolidation process in India, I reckon it will undoubtedly be the strategic intent of the global pharmaceutical companies to dig their feet deep into the fast growing Indian branded generic market, contributing over 98% of the IPM. The same process is being witnessed in other fast growing emerging pharmaceutical markets, as well, the growth of which is basically driven by the branded generic business.

Important characteristics to target the branded generic companies in India:

To a global acquirer the following seem to be important requirements while shortlisting its target companies:

• Current sales and profit volume of the domestic branded generic business
• Level of market penetration and the rate of growth of this business
• Strength, spread and depth of the product portfolio
• Quality of the sales and marketing teams
• Valuation of the business

What is happening in other emerging markets? Some examples:

The most recent example of such consolidation process in other emerging markets happened on June 10, 2010, when GlaxoSmithKline (GSK) announced that it has acquired ‘Phoenix’, a leading Argentine pharmaceutical company focused on the development, manufacturing, marketing and sale of branded generic products, for a cash consideration of around US $253 million. With this acquisition, GSK gains full ownership of ‘Phoenix’ to accelerate its business growth in Argentina and the Latin American region.

Similarly another global pharma major, Sanofi-aventis is now seriously trying to position itself as a major player in the generics business, as well, with the acquisition of Zentiva, an important player in the European generics market. Zentiva, is also a leading generic player in the Czech, Turkish, Romanian, Polish, Slovak and Russian markets, besides the Central and Eastern European region. In addition to Zentiva, in the same year 2009, Sanofi-aventis also acquired other two important generic players, Medley in Brazil and Kendrick in Mexico.

With this Sanofi-aventis announced, “Building a larger business in generic medicines is an important part of our growth strategy. Focusing on the needs of patients, Sanofi-aventis has conducted a regional approach in order to enlarge its business volumes and market share, offering more affordable high-quality products to more patients”.

Faster speed of such consolidation process could slow down the speed of evolution of the ‘generics pharmaceutical industry’ in India:

As the valuation of the large Indian companies will start attracting more and more global pharmaceutical majors, the revolutionary speed of evolution of the ‘generics pharmaceutical industry’ in India could slow down. The global companies will then acquire a cutting edge on both sides of the pharmaceutical business, discovering and developing innovative patented medicines while maintaining a dominant presence in the fast growing emerging branded generics market of the world.

Recent examples of Indian companies acquired by global companies:

1. Ranbaxy – Daiichi Sankyo
2. Dabur Pharma – Fresenius
3. Matrix – Myalan
4. Sanofi Pasteur – Shanta Biotech
5. Orchid – Hospira
6. Abbott – Piramal Healthcare

Indian Pharmaceutical companies are also in a shopping spree:

It has been reported that by 2009, around 32 across the border acquisitions for around US $2 billion have been completed by the Indian pharmaceutical and biotech players. Recently post Abbott deal, Piramals have expressed their intent to strengthen the CRAMS business to make good the drop in turnover for their domestic branded generics business, through global M&A initiatives.

Some of the major overseas acquisitions by the Indian Pharmaceutical and Biotech companies:

1. Biocon – Axicorp (Germany)
2. DRL – Trigenesis Therapeutics (USA)
3. Wockhardt – Esparma (Germany), C.P. Pharmaceuticals (UK), Negma (France), Morton Grove (USA)
4. Zydus Cadilla – Alpharma (France)
5. Ranbaxy – RPG Aventis (France)
6. Nicholas Piramal – Biosyntech (Canada) , Minrad Pharmaceuticals (USA)

What is happening in other industries?

In spite of the global financial meltdown in 2009, the future of M&A deals in India looks promising across the industry. Some of the major offshore acquisitions by the Indian companies are as follows:

 

Mega acquisition of foreign companies by Indian companies:

• Tata Steel acquired 100% stake in Corus Group on January 30, 2007 with US$12.2 billion.
• India Aluminum and Hindalco Industries purchased Canada-based Novelis Inc in February 2007 for
US $6-billion.
• The Oil and Natural Gas Corp purchased Imperial Energy Plc in January 2009 for US $2.8 billion.
• Tata Motors acquired Jaguar and Land Rover brands from Ford Motor in March 2008. The deal
amounted to $2.3 billion.
• Acquisition Asarco LLC by Sterlite Industries Ltd’s for $1.8 billion in 2009
• In May 2007, Suzlon Energy acquired Germany’s- wind turbine producer Repower for US$1.7 billion.

Mega acquisition of Indian companies by foreign companies:

• Vodafone acquired administering interest of 67% owned by Hutch-Essar, on February 11, 2007 for US
$11.1 billion.
• The Japan based telecom firm NTT DoCoMo acquired 26% stake in Tata Teleservices for USD 2.7
billion, in November 2008.

An alarm bell in the Indian Market for a different reason:

It has been reported that being alarmed by these developments, Indian Pharmaceutical Alliance (IPA) has written a letter to the Department of Pharmaceuticals, highlighting, “Lack of available funding is the main reason for the recent spurt in the sale of stakes in domestic companies”.

The letter urged the Government to adequately fund the research and development initiatives of the Indian Pharmaceutical Companies to ensure a safeguard against further acquisition of large Indian generic players by the global pharmaceutical majors. To a great extent, I believe, this is true, as the domestic Indian companies do not have adequate capital to fund the capital intensive R&D initiatives.

Will such consolidation process now gain momentum in India?

In my view, it will take some more time for acquisitions of large domestic Indian pharmaceutical companies by the Global Pharma majors to gain momentum in the country. In the near future, we shall rather witness more strategic collaborations between Indian and Global pharmaceutical companies, especially in the generic space.

The number of high profile M&As of Indian pharma companies will significantly increase, as I mentioned earlier, when the valuation of the domestic companies appears quite attractive to the global pharma majors. This could happen, as the local players face more cut-throat competition both in Indian and international markets, squeezing their profit margin.

It will not be a cake walk…not just yet:

Be that as it may, establishing dominance in the highly fragmented and fiercely competitive IPM will not be a ‘cakewalk’ for any company, not even for the global pharmaceutical majors. Many Indian branded generic players are good marketers too. Companies like, Cipla, Sun Pharma, Alkem, Mankind, Dr.Reddy’s Laboratotries (DRL) have proven it over a period of so many years.

We witnessed that acquisition of Ranbaxy by Daiichi Sankyo did not change anything in the competition front. Currently the market share of Abbott, including Solvay and Piramal Healthcare, comes to just 6.4% followed by Cipla at 5.5% (Source: AIOCD). This situation is in no way signifies domination by Abbott in the IPM, even post M&A.

Thus the pharmaceutical market of India will continue to remain fragmented with cut-throat competition from the existing and also the newer tough minded, innovative and determined domestic branded generic players having both cost arbitrage and the spirit of competitiveness.

Simultaneously, some of the domestic pharmaceutical companies are in the process of creating a sizeable Contract Research and Manufacturing Services (CRAMS) sector to service the global pharmaceutical market.

Conclusion:

In my view, it does not make long term business sense to pay such unusually high prices for the generics business of any company. We have with us examples from India of some these acquisitions not working as the regulatory requirements for the low cost generics drugs were changed in those countries.

Most glaring example is the acquisition of the German generic company Betapharm by DRL for US$ 570 million in 2006. It was reported that like Piramals, a significant part of the valuation of Betapharm was for its trained sales team. However, being caught in a regulatory quagmire, the ultimate outcome of this deal turned sour for DRL.

Could similar situation arise in India? Who knows? What happens to such expensive acquisitions, if for example, prescriptions by generic names are made mandatory by the Government within the country?

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

85% of the patented new drugs have therapeutic equivalents…they do not increase the cost of treatment for the common man: Points…Counterpoints

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Affordability of patented drugs has become a major controversial and at the same time a very sensitive issue in the healthcare space of India, just as in many other parts of the world. The government, the NGOs and other stakeholders, on the one hand, seem to be quite concerned about it. Innovator companies, on the other hand, also have quite robust arguments in their favor.

Meanwhile, the daily newspaper ‘DNA’ published a report on June 15, 2010 with a headline, “NPPA may cap cancer drug prices via Para 10’.

Let us now try to go through the points and counterpoints of this raging debate.

The basic reasons of concern:

The key points for this concern, I reckon, is based on the following two beliefs:

1. All our citizens should have access to all new drugs
2. All these new drugs are essential to treat most of the related disease conditions

Points in favor of free pricing for patented new drugs:

- Price is a function of the value that a patented new drug will offer to the patients. The price of new drugs will, in addition, include components of the cost incurred by the innovators towards research and development, to offer these products to the patients. This is absolutely essential to ensure continuous investment towards R&D by the innovator companies to meet the unmet needs of the patients.

- It has been reported that currently only 2.3% of the Indian Pharmaceutical Market (IPM) will represent drugs, which have no therapeutic equivalent. This means over 97% of the IPM constitutes of medicines, which have one or more therapeutic equivalents.

- So far as the patented products are concerned, over 85% of all those will have therapeutic alternatives. Empirical evidence suggests that just around 15% of the patented molecules have significant therapeutic advantages over existing drugs and cannot be replaced.

- Beta-lactam, Cephalosporin and Quinolone group of antibiotics are still relevant today and will remain for many more years. So are the likes of Beta Blockers, Calcium antagonists, Ace inhibitors, Proton Pump inhibitors and Statins.

- Therefore, all patients with any common disease profile will have adequate and a good number of cheaper treatment options with the generic drugs. As all new drugs are not essential to treat all related disease conditions, generic and patented medicines should co-exist to cater to the healthcare needs of patients of all income groups. Those who can afford to pay extra for the incremental value of such patented drugs should also have an option.

The Counter points:

- The opponents of the above argument raise the counter question, “if 85% of the patented drugs will have appropriate therapeutic equivalents, why then the pharmaceutical companies spend such a huge amount of money and other resources towards R&D to invent molecules, which do not add significant and substantial value to the existing ones to treat patients? Rationalization of such avoidable R&D expenditures will help reducing the price of even path-breaking patented molecules for the treatment of many disease conditions of the ailing patients”

- In this context ‘Australian Prescriber (2004; 27:136-7)’ commented:

“The patent system, which assumes that investment in the development of new drugs, is so important that the principles of the free market should be abrogated to reward pharmaceutical companies with a legally enforced period of protection from competition”.

- NGOs with a differing view point ask, “Many patented products are still not available in India, does the medical profession in the country find themselves seriously handicapped for not having access to these drugs?’

- This group puts forth the counter argument, “patent protection is based on the fundamental belief that for continuing investment to invent newer drugs, innovations must be adequately rewarded through appropriate protection of the patents. Thus patent protection should only be given to those innovations for which no therapeutic equivalents are available.”

Conclusion:

A die-hard protagonist for fostering innovation commented, though the exclusivity for a patented drug given to an innovator would last for 20 years, the real commercial benefits will be available for just around 10 years, that too after spending a fortune towards R&D. Whereas, post patent expiry, the commercial benefits to the generic manufacturers (virtually spending nothing towards R&D) for the same molecule will last in perpetuity…for the patients’ sake!

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.